LOUISVILLE, Colo. — Lavender Farms, an upscale assisted-living facility in the Boulder suburbs, promised “24/7 on-site care” in its marketing materials. But managers at its operating company, Balfour Senior Living, worried deeply about their ability to care for the elderly residents who roamed the farmhouse-chic corridors at odd hours and sometimes wandered outside unnoticed, documents and interviews show.
Balfour managers proposed raising wages to hire and retain more and better caregivers to improve resident safety. But to do that, the managers said, Balfour needed the approval of Welltower, the $40 billion investment firm that owned Lavender Farms.
Executives at Welltower balked.
“Their position was: We are trying to increase our profitability,” said one former Balfour executive, speaking on the condition of anonymity to discuss internal matters. “Care is an ancillary part of the conversation.”
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For two decades, Balfour has been a star of the senior-housing industry, marketing its properties like boutique hotels, replete with high-end furnishings, fine dining and concierge services. But as Welltower and other professional investors have acquired the buildings where Balfour operates, waves of cost cutting have left it unable to meet the basic needs of many residents, according to interviews and documents obtained by The Washington Post.
Last year, resident Mary Jo Staub, 97, died after banging repeatedly on the locked doors of Lavender Farms in subfreezing temperatures. Her death was among at least 20 incidents of neglect, missing people or avoidable deaths cited by state inspectors at Balfour’s Colorado facilities since its founding in 1997. Since Balfour sold its properties to corporate investors in 2014, the vast majority of citations have indicated problems with staff.
Failures at Balfour facilities are symptoms of deeper problems in the $34 billion market for assisted living and memory care, a growing industry that now provides care and housing for more than a million Americans, according to industry estimates.
Conceived about 40 years ago to give seniors more freedom in their final years of life, the assisted-living industry has been reshaped by real estate speculators looking to cash in on an aging nation. They were aided by Congress in 2008, when a new law gave certain investors the ability to hold senior-housing properties tax-free while also taking a slice of their annual income.
As a result, many facilities across the nation are now held by investors under pressure to produce profits for shareholders. In some places, a bare-bones approach to staffing and pay has produced a chaotic environment where medications are missed, falls and bed sores go unnoticed, residents are abused and confused seniors wander away undetected, according to a review of 160,000 state inspection reports and interviews with more than 50 current and former employees of assisted-living businesses and relatives of current and former residents.
End of carouselIn the past five years alone, nearly 100 residents have died after wandering away from these facilities or being left unattended outside, a Post investigation found. State regulators investigating these deaths frequently cited limited staff, poor training or neglect.
Business leaders acknowledge struggling to find workers, a problem they blame on a nationwide labor shortage that worsened during the pandemic. Companies have had to adjust by “asking current staff to work extra shifts, hiring agency staff, or limiting new admissions because they refuse to compromise care,” Rachel Reeves, a spokeswoman for the American Health Care Association/National Center for Assisted Living, an industry lobbying group, said in an email.
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‘I am exhausted’
But data and interviews suggest these facilities are losing staff because they don’t pay a competitive wage.
Nationally, assisted-living aides make an average of $15 an hour, according to the U.S. Bureau of Labor Statistics — less than most Starbucks baristas. Yet these employees are tasked with bathing, toileting, medicating and safeguarding a population growing increasingly frail and likely to suffer from dementia or Alzheimer’s.
When staff is limited, one caregiver may assume responsibility for two dozen residents. Last year, in a national survey of 120 facilities by the National Center for Assisted Living, 98 percent said they asked staff to work extra shifts to make up for staffing shortages.
“Of course the care is going to suffer. Because I am exhausted,” said Amanda Matthews, 46, a longtime caregiver and manager of memory-care facilities in Colorado.
Neither Balfour nor Kisco Senior Living, the Carlsbad, Calif.-based company that combined with Balfour in October, responded to numerous requests for comment. A Lavender Farms manager declined to answer questions from a reporter who visited the facility. A Welltower spokesperson also declined to comment.
Even as workers struggle and some residents suffer, many businesses are thriving.
Long-term investors in senior home real estate, which includes assisted living, receive returns of nearly 9 percent a year on average — more than double the yield for offices and hotels, according to the National Council of Real Estate Investment Fiduciaries.
Investors prefer to buy the buildings that house senior homes — instead of buying equity in the businesses — because they gain rental income and valuable property portfolios without being directly exposed to the legal risks of caring for a fragile population. Typically, a real estate owner will approve a detailed business plan that sets out budgets for labor and care, and pay a management company a fee to run the facility according to plan.
Residents may never know the names of the investment firms that own their buildings, but these firms typically collect about 30 percent of their monthly rent checks, according to commercial real estate researcher Green Street. In a typical arrangement, about 65 percent of income goes to cover costs such as labor, marketing and supplies, while 5 percent goes to a management company, such as Balfour.
Locked out
The night of Feb. 25, 2022 — long after Lavender Farms managers had raised concerns to Balfour executives about wandering residents — Mary Jo Staub left the facility wearing pajamas and a robe in 15-degree weather. After breaking her ankle and realizing she was locked out, she used a broom to bang on a door next to the nurse’s station for 30 minutes, according to security-camera footage obtained by The Post through an open records request. No one came to help.
A lawsuit brought by Staub’s family alleged that the two staff members on duty — women who made around $20 an hour — had been in the third-floor theater room when they were supposed to be checking on Staub, who had been flagged for close monitoring because of confusion and hallucinations.
Near 6 a.m., one of the women finally found Staub outside, unresponsive on the pavement. Her walker was stuck in the snow and a trail of blood traced her path to the door she had desperately tried to reenter, according to videos, photos and records provided by police.
Balfour notified residents that someone died “after leaving the building on her own and experiencing a fall outside.” The company has repeatedly declined to comment to media about Staub’s death.
In legal filings, Balfour’s lawyers denied claims by Staub’s family that the company’s negligence resulted in her death, and that its marketing of exceptional care and safety amounted to fraudulent misrepresentation.
Staub’s death shocked relatives of Lavender Farms residents who demanded to know why the facility had not hired more staff or done more to ensure that nighttime caregivers were monitoring the exits. “How did this happen?” said Shari Edelstein, whose mother lived in Lavender Farms until her death earlier this year. “This is one of the most expensive facilities in Boulder.”
But to people who have worked in assisted living, Staub’s death was another data point in a pattern that has unfolded across the industry. Hundreds of properties change corporate owners every year, and staffing and pay are often the first expenses trimmed by investors focused on profits, according to interviews with industry experts and current and former employees at multiple companies.
“These companies come in and purchase communities and say they are going to make everything better,” said Matthews, who has worked for several senior-care companies, including Balfour. “The reality is, being somebody in the trenches, it doesn’t get better. The pay doesn’t change. The expectations are: ‘Now you are going to do more, for the same amount of money or less.’”
EDITOR’S NOTE
Viewers may find the following video disturbing. The Post reviewed 34 hours of video and carefully selected footage with an eye toward balancing sensitivity to the viewer and accuracy in portraying the final hours of Mary Jo Staub’s life. The Post concluded that allowing the public to witness these events firsthand provides a deeper understanding than words alone can convey.
Assisted living got its start in the 1980s, when pioneers drew inspiration from nonprofit and faith-based “board and care” homes to develop for-profit options for older adults who needed help with daily activities but were not sick enough for nursing homes. These businesses arrived as women increasingly entered the workforce, leaving two-income families in a quandary over how to care for elderly parents.
“Along came assisted living, in a Victorian mansion, with a chandelier and a curved staircase,” said Bob Kramer, who co-founded the National Investment Center for Seniors Housing & Care, or NIC, a nonprofit research group, in 1991.
Early success led to rapid construction through the 1990s, with several chains launching initial public offerings. Wall Street investors were attracted by the growing sector, which promised to explode as baby boomers retired.
“We had people who didn’t understand the business getting into it,” said Pat Sprigg, who spent three decades as chief executive of a nonprofit facility in North Carolina. “They understood there were boomers on the horizon and their approach was: ‘Let’s just warehouse them. Let’s do the brass-and-glass game and attract people into these beautiful places, and then neglect to train staff and neglect to pay them a fair wage.’”
The financiers included private-equity firms — investors who manage giant pools of money on behalf of even larger investors such as pension funds and endowments. These firms typically try to boost the value of assets and sell them after five to 10 years, providing returns to themselves and their outside investors.
Some senior homes were also bought by real estate investment trusts, or REITs, an investment class created by Congress in the 1960s to give stock market investors the ability to buy and sell shares in real estate. REITs pay no corporate income tax and distribute dividends to shareholders. Nearly half of Americans — around 45 percent of U.S. households — are invested in some type of commercial real estate REIT through retirement funds or pensions, according to industry group Nareit.
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Congress gave these businesses a boost in 2008 with a new law allowing senior-housing REITs to share in the profits from operations, rather than act as passive landlords. This corporate structure, also common in hotels, incentivizes REIT investors to replace management teams that fail to generate expected profits.
“They hold the hammer,” said David Kingsley, a researcher with the nonprofit Center for Health Information & Policy.
Welltower, the biggest owner of senior homes in the country, distributes more than $1 billion in dividends to shareholders annually, including mutual fund giants Vanguard and BlackRock and the pension fund of Norway. Other senior-housing investors have collectively generated hundreds of millions of dollars for public pension plans in Arizona, Indiana, Maryland, North Carolina, Texas and other states, investor filings show.
Kramer said the industry has never strayed from its mission of providing quality care, but that also requires a careful focus on costs and profit margins. “If you don’t have a margin, you can’t pursue a mission,” he said. “If you don’t have a mission, you’re also not going to produce a margin.”
Balfour rode the early wave of enthusiasm for assisted living. Its founder, Michael Schonbrun, envisioned a “Four Seasons experience,” building a series of Colorado facilities that reflect local culture. There’s an equestrian-themed community in the gold rush town of Littleton and a glitzy seniors home developed from a historic train station in downtown Denver.
A former health-care executive, Schonbrun initially funded his business through bank loans and individual investors. But in 2014, he sold all three of Balfour’s buildings to AEW, a Boston-based private-equity firm.
Some senior homes are left hobbled by private-equity ownership, according to interviews and records. Brookdale is the nation’s largest operator of senior-living homes. After it was acquired by private equity in 2000, it sold many of its buildings to investment firms to pay down debt, corporate filings show, which then locked Brookdale into costly long-term leases with the new owners.
Despite collecting more than $1 billion in rent from residents and other fees each of the past 17 years, Brookdale lost money in all of those years except 2020. Its stock price, which peaked at $53 a share in 2006, has dwindled to $5.
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Meanwhile, eight residents filed a lawsuit in 2017 claiming that Brookdale systemically understaffed its facilities to boost profits. More than 80 residents and their relatives described in legal declarations how short staffing led to falls, diaper rashes, urinary tract infections, broken bones and residents waiting hours for their call pendant buttons to be answered, but a federal judge rejected a motion to elevate the case to a class action. The case is set for trial next year.
In 2020, three residents of Brookdale facilities — in Arizona, Delaware and Florida — died after leaving the buildings unsupervised, according to reports by state regulators.
Jackie Dickson, a spokeswoman for Brookdale, denied allegations of understaffing. Despite the “significant negative financial impact” of the pandemic, Brookdale has continued to invest in the growth and development of its workforce, she said. She declined to comment on the three deaths, but said the well-being of residents “always has been our top priority.”
Emily Schillinger, a spokeswoman for the American Investment Council, a private-equity industry group, said that health-care facilities in general face workforce shortages. “When private-equity firms invest in facilities, their focus is delivering high-quality care and improving patient outcomes,” she said.
After AEW acquired Balfour’s buildings, it expanded to several new locations. But it also looked for ways to cut costs, according to a former senior manager.
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While Balfour still advertised food rivaling “Colorado’s best restaurants,” fresh menu items were replaced with fried foods and processed meals, causing problems for some residents who required low-sodium diets, said Mary Shomaker, who moved her father to a different facility. “We tried to get them to see that this was a big mistake,” she said.
AEW spokeswoman Maureen Richardson declined to comment.
Meanwhile, cuts to the nursing staff made it difficult for Balfour to make good on its marketing promise of “24-hour on-site nursing,” said a former executive who supervised nursing.
On Christmas Eve 2018, the day nurse at Balfour’s downtown Denver facility ended her shift at 8 p.m., and the night nurse came on at 10 p.m. During that two-hour gap, a male resident in his 70s with Type 1 diabetes was not given his required insulin injection, state records show. Around 3 a.m., a staff member discovered the mistake and gave him the drug. But the man was dead by 7 a.m. Christmas morning.
Balfour reported these events to state inspectors. The death certificate said the man died from a “probable cardiac event and complications from diabetes mellitus,” state records show. Balfour told authorities it would not have any future gaps in nursing coverage “when there are insulins scheduled.”
A few months later, AEW sold Balfour’s buildings to Welltower for $300 million. AEW’s biggest outside investor in the fund that bought and sold the buildings, the Texas teacher pension fund, made at least $30 million on its investment, according to Rob Maxwell, a spokesman for the pension fund. He declined to comment on its investment strategy.
Low pay, low quality
The investment frenzy over senior housing was on full display at NIC’s fall 2022 industry conference in Washington, D.C., which featured a mock version of the “Deal or No Deal” game show. Investors fired fake money from toy handguns labeled “MAKE IT RAIN” when contestants pitched a senior home concept with promise.
The gathering this October in Chicago was more sober, with experts bemoaning high interest rates and a shortage of low-cost labor.
Welltower chief executive Shankh Mitra acknowledged that wages matter but said businesses also need to make jobs more appealing, for example, by using technology to reduce the time workers spend on administrative tasks. “We have to double down on employee experience,” Mitra said during an onstage interview. “The turnover in our business needs to go down. We can create real career tracks for people.”
Welltower owns about 95,000 senior-home units, from apartment-like “independent-living” dwellings to secure memory-care units. Its top rival, Ventas, owns about 68,000. Together, the two REITs own more senior-home units than the next nine biggest players combined, according to data from the American Seniors Housing Association.
Assisted-living businesses strive for operating profit margins of 20 to 30 percent — on par with software and pharmaceutical companies. Welltower touts its partnerships with operators who push margins even higher. In 2021, it removed Sunrise Senior Living as manager of six properties in California and replaced it with Oakmont Senior Living, which moved in more residents and raised rates by about 10 percent, increasing annual operating income from $600,000 to $14 million, according to a corporate filing.
When Welltower bought Balfour’s properties in 2019, it began holding regular calls with Balfour management geared toward reining in spending, several former managers said.
Balfour was allowed to continue spending on aesthetic renovations, even some that compromised resident safety. For example, executives insisted on placing an ottoman in the center of a common area though it caused frail residents to trip and fall, former managers said. And apartment doors in a memory-care facility were painted black though clinicians warned that some residents suffering from dementia would see them as black holes.
But Welltower pushed back when managers asked for more money to address growing problems with the quality of Balfour’s workforce. Former employees say they saw workers sleeping on the job, watching movies in the theater room and spending hours vaping in the kitchen. Some staffers felt uncomfortable administering certain drugs, such as vaginal suppositories, so they simply didn’t.
“They will just hire anyone who is willing to learn,” said Josie Charron, who worked as a medical technician at Lavender Farms until leaving in 2021 to become a journalist.
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In a 2020 interview published on Balfour’s website, Schonbrun acknowledged that the company struggled with “painful personnel issues” as Balfour expanded to nine facilities.
“In some cases people deselected themselves, moved on to other opportunities,” Schonbrun said. “In other cases, we had to give them a nudge out the door and then reassure the people who stayed behind that the fundamentals of the culture were going to stay in place.”
About 43 percent of assisted-living workers, excluding new hires, left their jobs in 2022, according to a survey by industry researcher Hospital & Healthcare Compensation Service. Workers say they can make more money at easier jobs in restaurants or retail. King Soopers, the grocery store across the street from Lavender Farms, paid higher wages than the senior home.
“When you see how much work you do at the end of the day and you get paid that amount? It’s insane,” said Culix Wibonele, a certified nursing assistant who earns $16 an hour at an assisted-living facility in Atlanta.
Some businesses offered pay raises of $1 or $2 an hour during the pandemic, but stopped short of boosting wages enough to make the jobs sustainable for most people, said Melissa Unger, executive director of SEIU Local 503 in Oregon. Residential-care aides, including those who work in assisted living, are 85 percent female and disproportionately people of color and immigrants, according to research aggregated by labor advocacy group PHI.
Matthews, who managed the memory-care wing in one of Balfour’s Denver facilities from 2016 through 2019, said three-quarters of her front-line staff relied on some form of government assistance.
Welltower’s Mitra, on the other hand, has risen to become one of the highest-paid executives in the country. Last year, his pay package totaled $38 million, including equity grants that Mitra forfeits if Welltower does not hit certain growth targets in the next four years. That made him the 13th highest-paid CEO on the S&P 500 stock index, among those who have been in their jobs for at least two years, according to compensation researcher Equilar — close behind the heads of Netflix, American Express and Morgan Stanley.
Welltower’s board of directors defended the pay package in its annual proxy statement to investors, saying the company has outperformed rivals during Mitra’s tenure.
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Mounting problems
Staub, a mother of three daughters who earned a private pilot’s license and started her own sewing business later in life, moved into Lavender Farms in 2019, after her husband died.
In the months before her death, problems were mounting at the facility. A King Soopers manager said she repeatedly called to report wandering seniors who did not know their names or where they lived. An administrator told state inspectors that installing an exit door alarm was “considered but not implemented.” An employee interviewed by inspectors said there was “only so much we can do” to keep track of residents.
Some Balfour residents probably should have been in a dedicated dementia facility, where doors are alarmed and often locked, former employees said. But the company allowed its sales and marketing team to assess new residents — sometimes without input from medical staff — and some were improperly assigned to the nearest empty bed, the former employees said.
In November 2021, Staub was transferred to a nursing home after falling and fracturing her pelvis. Two months later, Balfour encouraged Staub to return to Lavender Farms, agreeing to place her on a higher level of care with more frequent checks for $1,500 a month on top of standard monthly fees, which are currently advertised as starting at $6,800.
A nurse practitioner who assessed Staub at the time wrote that she “had a history of weakness and episodes of confusion” and should be monitored “throughout the night for sleep walking,” according to the Staub family lawsuit against Balfour, Schonbrun and the two night staffers. The case settled last month for an undisclosed amount.
After Staub’s body was discovered, a Lavender Farms manager called Staub’s daughter to say her mother had “hurt her ankle” and was being taken to the hospital, according to the legal complaint. The daughter learned of her mother’s death and nightlong ordeal only after “she arrived at the hospital and was asked to identify Mary Jo’s body under a blood-soaked sheet,” the lawsuit said.
In police interviews, the two caregivers tasked with monitoring residents that night said they had checked on Staub around midnight; she was spotted on surveillance cameras at 12:41 a.m.
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However, they did not record any checks in Lavender Farms’ records. One of the women left the building shortly before midnight, security-camera footage shows. The other had previously been reported to management for sleeping during night shifts and letting resident calls go unanswered for hours, said a former employee who witnessed and reported this behavior but was not authorized to publicly discuss personnel matters.
Sarah Krus, a facility administrator, told police that Staub had instructed staff months earlier to reduce nightly checks to avoid waking her up, but she said the facility had no written record of the request.
Balfour administrators did not answer The Post’s questions about why no one came to open the doors; they told police the doors were locked at night in response to “numerous instances of homeless individuals and others on the property after hours.”
In their report on the incident, state inspectors said Lavender Farms had created “an immediate jeopardy risk of injury or death” to everyone who lived there. Regulators fined the facility $1,500 and required improvements to resident safety. Local authorities declined to bring criminal charges.
Balfour told state regulators it would reassess residents who were known to wander and initiate nightly sweeps of the building. A woman who had been locked outside for an hour the same night Staub died was moved out shortly afterward.
In May 2022, Colorado lawmakers passed new laws requiring stricter background checks for employees and minimum levels of experience for managers at assisted-living facilities. The new law — enacted after a spate of preventable deaths — also allowed regulators to impose stiffer fines, which had previously been capped at $2,000 per facility per year.
Meanwhile, Balfour executives quietly ordered security cameras to be permanently removed from Lavender Farms, according to a person who was briefed on the matter. The reason, the person said, was “to minimize liability.”
Yeganeh Torbati, Todd C. Frankel, Julie Z. Weil, Joy Sharon Yi and Alice Crites contributed to this report.
The Washington Post is continuing to report on the assisted-living industry, and we want to know your experiences with elder care, assisted living and dementia care. Tell us about your experience here.
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